Federal Tax Liens
The United States has an automatic or secret lien for estate taxes for 10 years from death of the decedent. The lien does not have to be filed. Purchasers from the estate generally take subject to the lien. The estate generally is taxable unless the gross estate is worth less than $600,000 (for those dying after 1986) or unless all property is left outright to the surviving spouse.
Gift Tax Lien, if any
Any federal gift tax lien arising out of the deed recorded _______________. The Company requires satisfactory proof that no taxes are owed or that the taxes have been paid.
Comment: The gift tax lien is effective for 10 years from gift if no notice is filed. Although a bona fide purchaser will extinguish the prior unrecorded gift tax lien, you should require proof that no gift tax is owed if the land was given to the owner or predecessor in the last 10 years.
See Underwriting Manual
Federal Tax Lien – Nonjudicial Foreclosure of P
The record discloses a Federal Tax Lien against __________________ recorded __________________, which is inferior to the lien foreclosed by Trustees’ Deed recorded _________________. This tax lien was filed more than thirty (30) days prior to the Trustee’s sale. The Company must be furnished for its review with a satisfactory: (a) release; or (b) affidavit by the sender or written statement of the Special Procedure Chief, that sufficient notice of the Trustee’s Sale was given to the Internal Revenue Service. If the Company is not satisfied with the documents furnished, the Policy will except to the lien. If the Company is satisfied with the notice given and less than 120 days have passed since the sale without redemption of the United States, the Company will except to the right of redemption in favor of the United States.
Comment: If the notice of tax lien was filed more than 30 days before a nonjudicial foreclosure, the U.S. must be given 25 day notice of foreclosure and the U.S. then has a 120 day right of redemption. If proper notice is not given to the U.S., the lien must be excepted or released.
See Underwriting Manual
Notice of Federal Tax Lien
Notice of Federal Tax Lien against __________________ in the amount of ____________, plus costs, interest and additional taxes recorded ____________.
Comment: Federal tax lien notices are now effective for 10 years and 30 days after date of assessment. They may be extended for additional 10 year periods by refiling.
Redemption by U.S. - (Judicial or Nonjudicial F
Rights of the United States to redeem for 120 days from ________________ arising out of the foreclosure evidenced by ________________ recorded __________________.
Comment: In the event of a nonjudicial foreclosure of a prior lien, the U.S. is entitled to 25 day notice of foreclosure if the federal tax lien notice was recorded more than 30 days before foreclosure. If the U.S. is not given proper notice, the lien is unaffected and must be excepted. If the U.S. is given proper notice, it still has a right for redemption for 120 days or any longer time allowed by state law.
In the event of a judicial foreclosure of a prior lien, the U.S. has a right for 120 days or any longer time allowed by state law.
The notice must contain the following information, in “simple and non-technical terms:”:
(a) a brief statement of the statute and applicable procedure relating to levy & distraint sale;
(b) the administrative appeals available to the taxpayer;
(c) alternatives available to the taxpayer; and
(d) the provisions and procedures relating to redemption and release of liens.
If proper notice was given by personal delivery to the taxpayer, no further exception need be raised.
If the notice was not delivered in person, or by certified or registered mail with receipt requested (and a copy of the receipt signed by the taxpayer is produced), the following exception will be raised:
(a) the time and place of publication;
(b) a copy of the published notice, with an affidavit of publication from the newspaper publisher;
(c) an affidavit of regularity from the official conducting the sale, setting forth the details and particulars of the sale, including the date, time and place the sale took place, identification of persons who attended, the manner of bidding used, the amount of the successful bid and the identity of the bidder.